Does granting managerial autonomy in exchange for accountability mitigate gaming?

• Published date: 01 July 2023
• Author: Xu Han,Weijie Wang
• Date: 01 July 2023
• DOI: http://doi.org/10.1111/puar.13564

RESEARCH ARTICLE

Does granting managerial autonomy in exchange

for accountability mitigate gaming?

Xu Han

1

|Weijie Wang

2

1

Amazon, Adelphi, Maryland, USA

2

Truman School of Government and Public

Affairs, University of Missouri, Columbia,

Missouri, USA

Correspondence

Weijie Wang, Truman School of Government

and Public Affairs, University of Missouri,

615 Locust Street, E329, Columbia, MO 65211,

USA.

Email: wangweij@missouri.edu

Abstract

To improve organizational performance, the doctrine of performance manage-

ment states that managers need to be granted autonomy in exchange for

accountability for results. However, managers are often held accountable without

autonomy in practice. The accountability pressure often causes gaming behaviors.

How does granting managerial autonomy in exchange for accountability affect

gaming behaviors? To address this question, we investigated how a performance

management reform in New York City public schools, the Empowerment Zone,

affected two types of gaming behaviors: effort substitution and cream skimming.

Utilizing a difference-in-differences estimation strategy over multiple periods, we

find that the Empowerment Zone experiment mitigates effort substitution and

cream skimming in public schools, but the effect is modified by organizational

resources. The findings show the potential of fully implementing performance

management doctrine in mitigating gaming and suggest that human resources

are crucial for realizing the potential.

Evidence for Practice

•With sufficient resources, granting managers autonomy in exchange for

accountability for results can mitigate effort substitution by not only improving

organizational performance in high-stakes areas but also in low-stakes ones.

•With sufficient resources, granting managers autonomy in exchange for

accountability can reduce cream-skimming and promote equity by not only

benefiting traditionally advantaged citizen subgroups but also traditionally dis-

advantaged ones.

•To reap the full benefits of performance management, public organizations

need to have sufficient human resources to deal with the volume and complex-

ity of tasks associated with performance management and to keep employees’

workload at a reasonable level.

INTRODUCTION

An important doctrine of performance management holds

that managers need to have more autonomy in exchange

for accountability for results (Moynihan, 2008). However,

policymakers often constrain public managers’autonomy

in performance management reforms, causing managers

to be held accountable without autonomy (Heinrich &

Marschke, 2010; Jakobsen & Mortensen, 2016). The result

has been a partial adoption of the performance manage-

ment doctrine, and unfortunately, managers often respond

to the relentless accountability pressure by gaming the sys-

tem (Bohte & Meier, 2000; Booher-Jennings, 2005;Soss

et al., 2011). This creates an important question for

research and practice: How would fully implementing the

doctrine of granting autonomy in exchange for account-

ability affect gamingbehaviors?

On the one hand, granting managers autonomy in

exchange for accountability can aggravate gaming.

Autonomy allows managers to attain goals by skirting

rules that protect important values such as equity and

transparency (Radin, 2006). On the other hand, manage-

rial autonomy can mitigate gaming. Autonomy enables

and motivates managers to make meaningful changes to

improve organizational performance, which relieves the

pressure for effort substitution. Managers with autonomy

Received:18August2021 Revised:7October2022 Accepted:21October2022

DOI: 10.1111/puar.13564

Public Admin Rev. 2023;83:793–808. wileyonlinelibrary.com/journal/puar © 2022 American Society for Public Administration.793

can tailor programs to better serve citizens’heteroge-

neous needs and solve problems, which reduces the need

for cream skimming (Holm, 2018; Ouchi & Segal, 2003).

Few studies have reconciled the competing theoretical

expectations for the relationship between granting auton-

omy in exchange for accountability and gaming. Given the

popularity of performance management reforms in the

public sector, especially those that heightened accountabil-

ity without granting autonomy, and the prevalence of

gaming following accountability reforms (Bevan &

Wilson, 2013; Heinrich & Marschke, 2010; Kerpershoek

et al., 2016), it is important tounderstand the effect of fully

implementing the doctrine of granting managerial auton-

omy in exchange for accountability on gaming. We aim to

further the research by examining how granting managers

autonomy in exchange for accountability affects two types

of gaming: effort substitution and cream skimming. Effort

substitution occurs when more effort is spent on high-

stakes metrics of performance at the expense of important

but low-stakes metrics (Benaine & Kroll, 2020; Kelman &

Friedman, 2009). In cream skimming, agencies do little to

serve clients with the poorest anticipated outcomes, focus-

ing resources instead on those more likely to contribute to

measured performance (Koning & Heinrich, 2013).

We focus on the Empowerment Zone (EZ) in New York

City public schools, which granted the principals autonomy

in curriculum, staffing, and budgeting in exchange for

accountability toperformance targets. The previous studies

have shown that granting managerialautonomy in

exchange for accountability can improve performance on

high-stakes metrics (Nielsen, 2014; Ouchi & Segal, 2003;

Wang & Yeung, 2018). We examine whether it improves

student performance in low-stakes subjects and the perfor-

mance of more disadvantaged student subgroups that

cost more time and resources to meet performance tar-

gets. To reconcile competing expectations for the effects

of managerial autonomy, we include human resources of

public organizations as a moderator because resources

influence the degree to which organizations effectively

handle tasks associated with performance management

(Moynihan, 2009; Overman, 2016).

Using a difference-in-differences estimation strategy

over multiple periods, we found that the EZ produced sta-

tistically significant effects on school average performance

not only in high-stakes subjects but alsoin low-stakes sub-

jects. Furthermore, the EZ affected proficiency rates of dis-

advantaged student subgroups, including racial minorities,

students with limited English proficiency, and students

with disabilities. Human resources measured by student–

teacher ratio significantly modified the effect. The effect

was positive in schools with lower student–teacher ratios,

but it was negative inschools with higher student–teacher

ratios.

This article furthers the research on mitigating gaming

in performance management. First, it demonstrates the

value of managerial autonomy in mitigating gaming

behaviors. Compared with previous reforms that only

heightened accountability without granting autonomy,

granting managerial autonomy in addition to accountabil-

ity can benefit both high- and low-stakes areas and both

advantaged and disadvantaged subgroups of students.

Second, it provides suggestive evidence that organizations’

human resources modify the effect of empowering man-

agers in exchange for accountability on gaming. To reap

the full benefits of performance management, public orga-

nizations need to have sufficient human resources to deal

with the volume and complexity of tasks associated with

performance management and to keep employees’work-

load at a reasonable level. Otherwise, employees may be

quickly overwhelmed, causing negative effects on organi-

zational performance. The findings support the importance

of investing in human resources for the success of perfor-

mance management (Kroll & Moynihan, 2015). Moreover,

this study suggests that performance management can

help disadvantaged groups and advance equity if man-

agers have the autonomy to make meaningful changes

and if public organizations have sufficient resources. This

finding carries not only important theoretical implications

but also practical implications for public managers to pro-

tect the interests of disadvantaged groups in delivering

public services.

LITERATURE REVIEW

Gaming in performance management

Gaming is an umbrella term that includes all types of per-

versity in performance management, ranging from data

manipulation, and effort reduction to effort substitution

(Benaine & Kroll, 2020; Heinrich & Marschke, 2010;

Kelman & Friedman, 2009). Gaming generates perfor-

mance improvement without advancing the objectives

behind the performance metrics (Benaine & Kroll, 2020).

In this article, we focus on the following two types of

gaming: Effort substitution and cream skimming.

Performance management aims to inform policymak-

ing and improve performance by regularly measuring

performance and holding managers accountable to a

small number of priority goals. While performance man-

agement practices enhance goal clarity, they can lead to

effort substitution where effort is spent on measured

goals at the expense of those that are hard to measure or

missing in performance evaluation. Unlike the private sec-

tor, the criteria for evaluating organizational performance

in the public sector tend to be more diverse (Jakobsen

et al., 2018). Stakeholders use various criteria in their eval-

uation of performance and push for the inclusion of

diverse values in the mission of public organizations.

Effort substitution is more problematic in public organiza-

tions where a narrow focus on efficiency and effective-

ness can crowd out other important goals, such as equity

and democracy, that public organizations are supposed

to promote (Radin, 2006).

794 INVESTIGATING PERFORMANCE MANAGEMENT REFORM IN NEW YORK CITY PUBLIC SCHOOLS